Tribal Group Blog

Tribal Group Blog

The value of benchmarking in Australia's TAFEs: Identifying and addressing improvement opportunities.

Accuratelyidentifying inefficiencies

The words and the backdrop may differ, but the sentiment is largely the same across the world’s Post Secondary Education (PSE)systems – find out which parts of the organisation are less efficient and address those inefficiencies.

If we look at the UK, the pressure has predominantly come from funding cuts driving the need forinstitutions to do more with less. Taking Further Education, then, initially college leaders sought savingsfrom non-student facing administrative functions, such as procurement and reprographics where theexistence of some ‘low hanging fruit’ made the task less arduous/ominous. Inevitably though, the pursuitof ever-leaner operations led to an increased focus on staff numbers and curriculum areas. Ultimately,large scale efficiencies will need to be found in curriculum areas. Delivering programs more efficiently(fewer program hours, larger class sizes) means fewer teaching staff are needed to deliver thoseprograms. For example, we were able to demonstrate to a previous UK client college how an increase inaverage class size of just one student per class would lead to savings of £1.5m.

In New Zealand the picture is very similar, with government funding cuts for tertiary education leading to a2017 spend of 10% less than 2009figures(8). Additionally, those cuts outpaced drops in student numbersand in 2018 a subsidy freeze increased pressure on the sector to identify scope for efficiencies.

And in Australia funding on Vocational Education and Training (VET) peaked during the 2011/12 academicyear and has since taken a downward turn, leading to a wide range of approaches being developed by thecountry’s states to keep the sector competitive and contributing to state and territory governments skillsneeds. In New South Wales, TAFE NSW recently embarked on its ‘One TAFE’ reform journey, consolidating11 individual providers into a single cohesive entity, with improving efficiency and productivity as one ofitscoreaims as it seeks to strengthen its position of the largest provider of high quality education andtraining in NSW. In Western Australia, 11 TAFE colleges were collapsed into five centresin an effort tostreamline services and reduce the financial impact of duplication of corporate functions.

In Canada, where the reliance on government funds is reducing as fee-paying international studentpopulations climb, efficiency drives are currently less prominent. Long-term however, institutions are likelyto focus on their efficiencies in order to remain competitive in the international student market, a trendalready observed in the UK market.

Answering the difficult questions

The ‘more for less’ mantra is so common across the global PSE landscape that it is rarely a judgement onthe management teams running the public provision, but rather a case of those management teams havingto find the answers to difficult questions posed by government policy.

To avoid merely applying a short-term fix to the problem, the trick of course is to really get under the skinof the organisation and fully understand its cost-base. In this way it is possible to make the objectivedecisions that will bring about greater efficiencies, but not detrimentally effect the organisation’s abilityto deliver quality education. And this is where many organisations hit their first, but all too significant,hurdle. For ease of reporting and accounting purposes, how costs are attributed and accounted is largelydependent upon the structure of the organisation.In reality however, costs might be shared acrossmultiple functions, so taking any one line of cost at face value might not be indicative of its true impacton the organisation. It follows that decisions made on that same ‘face-value’ will not necessarily impactefficiency in the predicted or desired manner.

Understanding the true costs of operations and staff (both academic and non-academic)

This, in essence, is one of the key tenets of benchmarking - stripping costs down to individual lines ofincome and expenditure and then categorising these according to a consistent modeland methodology. This approach reveals the true, full cost of delivering each core function by ensuring any latent costs within ‘other’ departments are captured and allocated correctly. For example, any marketing activities undertaken with teaching departments are re-allocated to the marketing activity in the benchmarking model and not shown as a teaching cost. This enables institutions to quantify differences in expenditure levels on a like-for-like basis against similar institutions. It also has the effect of truly seeing what functions/activities the institution is directing resource towards. In turn, this helps identify the scope for savingsand alsoenables leaders to model the impact of financial changes.

To put this in context, take the example of a Senior Administrator in a Canadian college. A true depiction of the role might reveal an emphasis on tracking and managing attendance, or alternatively supporting digital innovation within the college. These widely differing activities might be wrapped up in a single ‘administration’ cost but actually represent completely different aspects of operations. Tracking and managing attendance is closely linked to student retention and achievement and so has a significant impact on student performance. Digital innovation can drastically improve the efficiency and efficacy of curriculum delivery and can also improve student satisfaction. Investing in tracking attendance ought to lead to improved student outcomes. Investing in digital innovation ought to lead to improved curriculum efficiency (and reduced teaching staff costs) and improved student survey results. Without an understanding of what the “Senior Administrator” is actually doing, the institution cannot accurately assess current levels of investment in the two different activities. To effectively target future investment, the level of activity-based detail we provide is crucial.

Embedding a sustainable approach to resource management

The Birmingham Metropolitan College example illustrates how immediate savings and efficiencies can behighlighted, but institutions are equally as likely to need to identify medium to long-term opportunities forsavings. The approach described in the above example helps institutions shape their cost-base to meetwhichever strategy is being prioritised. These benchmarks of relative performance then provide useful andobjective ways of ensuring theinstitutionkeeps on track with those strategic plans. So, benchmarkingisn’t a discrete one-off activity, but more a component of a continuous performance measurement systemto identify opportunities, quantify benefits and confirm progress. In this manner, institutions measure‘distance travelled’ against a host of short/medium/long-term targets, including cost savings.

Increasing the use of management informationfor middle managers to drive performance improvement

The availability of relevant, timely and easy-to-interpret management information is often cited as a keybarrier to effective decision-making, especially in education sectors.In reality, identifyingcurrent levels offinancial and educational performance isn’t a given in many educational systems; gaps in data collectionat national, regional or institutional levels can hamper efforts to produce useful management informationthat enables appropriate comparisons and conclusions to be drawn.

Benchmarking naturally helps fill those gaps and the most successful utilisations can be found wherebenchmarking is embedded in the performance management information made available to leadershipteams and middle management. Benchmarks of relative performance are useful and objective waysof ensuring the organisation keeps on track with its strategic plans. At middle management level, theobjective information improves their operational knowledge and brings understanding and meaning to anyvariances from benchmark values. In turn, operational decisions are objective, evidence-based,and part ofa continuous improvement journey.

Involving middle managers in the benchmarking process also means they understand how the results havebeenproduced, andensures they “buy in” to the results. In turn, middle managers are willing to “own” thebenchmarking and act on the results. For example, Faculty Heads of technicalareas (e.g. Engineering)might reallocate staff budget from traditional lecturersto technician/demonstrators as a way of savingmoney.

Despite the differences in political forces at play, the structure of the post-secondary sector, and thefunding mechanisms employed, one constant we can observe in almost every educational system in everycountry is the need to achieve continuous improvement with limited funds. What differs significantly,is the way in which post-secondary institutions invest, measure and approach continuous improvement(from a discrete ‘one-off’ initiative to a ‘way of business’). This makes itchallenging- butby no meansimpossible -to benchmark performance and identify best practices that would benefit education providers, whereverthey are in the world.

Download the white paper to read more about how globally accepted and proven benchmarking techniques are being used to tackle today’s post-secondary education challenges, including:

Improved effectiveness and efficiency of delivery

Higher level of governance through greater transparency and accountability for the expenditure of public funds

A holistic view of individual institution’s costs and performance relative to other providers

Mat has worked in the FE & Skills sector for nearly 15 years specialising in the field of educational management solutions, and analytics & benchmarking solutions. He is currently the Marketing Business Partner at Tribal working on projects to support providers through the changing educational landscape.